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As Waterfront Smolders, Attention Turns to a Failed Deal

The 15 buildings at the Greenpoint Terminal Market in Brooklyn that were gutted in a spectacular 10-alarm fire on Tuesday were at the center of a complex real estate deal gone wrong between established and, at times, controversial developers. They were tangling over property that was itself the target of neighborhood preservationists hoping to secure the district's legacy as a landmark.

Firefighters continued dousing the smoldering blocks along West Street and Noble Street on the Greenpoint waterfront yesterday. Officials suspect arson, and investigators were waiting for a chance to search for evidence.

The buildings are now in ruins and may be a crime scene, and even before the fire, they did not look like much to a passer-by, just relics from a bygone time when they produced bales of rope for the shipyards along the East River.

But the property's value skyrocketed last year, when a prospective buyer placed a $42 million down payment, a tenth of the entire $420 million deal, and by itself almost twice what the owner had paid for the property five years earlier. Now a lawsuit seeks the return of the $42 million and describes how the deal fell apart.

Preservationists, who had failed in recent efforts to secure landmark status for other Brooklyn buildings, started a campaign to keep the Greenpoint Terminal Market from being knocked down, seeking the support of the local city councilman, David Yassky.

Whether the site's value, its status as a landmark and the continuing legal battle have anything do with the inferno on Tuesday is unknown. Fire marshals have been unable to enter the site.

Other aspects of the investigation are already under way, however, including background checks and interviews with people connected to the warehouse complex. Nearby surveillance cameras are being examined, and investigators are checking neighbors' reports that squatters frequently used the buildings.

The buildings were owned by Joshua Guttman, 58, of Lawrence, in Nassau County, a longtime developer of industrial sites in Brooklyn, who bought the buildings in 2001 for about $25 million with an eye toward flattening them. He applied for demolition permits with the city's Department of Buildings in March 2001, but for the most part the buildings stood dormant.

Photo

One of the gutted warehouses held piles of used clothes. Some of the weakened structures were knocked down Wednesday as a safety precaution.Credit
Suzanne DeChillo/The New York Times

That changed last year when the neighborhood zoning was revised from commercial to residential, sending brokers and prospective buyers hurrying to Mr. Guttman's door.

"Offers were being made daily on this piece," Joseph Kosofsky, a lawyer for Mr. Guttman, said yesterday. "Everybody wants to be your partner." One prospective buyer stood out: Baruch Singer, 52, a veteran developer. His offer did not have the sort of restrictive clauses and riders that Mr. Guttman found in the others, Mr. Kosofsky said.

"It was all cash," Mr. Kosofsky said. "It looked like a slam-dunk, in terms of a simple deal. They were going to buy it without any conditions or anything else."

Mr. Singer was involved in a dispute in 2000 with tenant groups and the federal Housing and Urban Development Department. The department blocked Mr. Singer from bidding on a Harlem property the department owned after it was alerted to a long record of complaints against him. Over the years, city housing officials have cited Mr. Singer's buildings for thousands of code violations.

According to the lawsuit Mr. Singer has filed in connection with the deal for the Greenpoint buildings, he planned to develop two of the property's six sites into condominiums quickly, and then pour the proceeds into the four remaining sites. Mr. Guttman agreed to help the deal through the bureaucratic maze that is familiar to anyone in the New York City real estate business, the lawsuit states.

"All of it looked like it was a go," Mr. Kosofsky said.

Mr. Guttman had hired Perkins Eastman Architects to prepare a proposal for development of the site. Their proposal called for about 2.6 million square feet of residential space over 14 acres stretching from Oak Street to Greenpoint Avenue. Several tall buildings were in the proposal, the biggest being 35 stories.

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"I was trying to give City Planning a vision for what could happen on that site," said Bradford Perkins, an architect and senior partner.

But the developers found that they could not begin work on the two fast-track sites until they won approval from the Department of City Planning for a "master plan" for the whole property, the lawsuit says.

That would have been impossible to do before the Jan. 17 closing date, the lawsuit states. A spokesman for the planning department said there was no requirement for a "master plan," but that a plan for waterfront access was required.

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Still burning Wednesday, the warehouses in the Greenpoint Terminal Market were the subject of a dispute by two established developers. Local preservationists had sought a landmark designation for the area.Credit
Suzanne DeChillo/The New York Times

Mr. Singer contends in the lawsuit that they "orally agreed" to put off the closing date for at least six months. He says Mr. Guttman, who is referred to in the lawsuit as "Seller," continued to help him with the Department of City Planning after the closing date had passed.

"But Seller has apparently had a change of heart and now pretends as if there was no agreement to extend the closing," the lawsuit states. The lawsuit says Mr. Guttman has kept the $42 million down payment. Some of the details of the troubled sale were reported yesterday in The New York Sun.

Mr. Guttman's lawyer dealing with the lawsuit, Israel Goldberg, declined yesterday to address the specifics of Mr. Singer's accusations. "Mr. Singer was held in default, and the contract was canceled," he said.

Mr. Guttman did not return calls for comment yesterday. His wife, Vera, said: "He's a hardworking man. That's exactly what it is. He's been working all his life. That's it, there's nothing more."

Mr. Singer did not return phone calls made to the address of his main management company, Triangle Management. His brother, Eli Singer, challenged any suggestion that his brother had been involved in any untoward activity.

"He's a wonderful human being," he said. "He would probably pay every penny that he had not to have anything to do with arson. He's as straight as an arrow."

Preservationists had increased their efforts after last year's rezoning of almost 200 waterfront blocks of Brooklyn. In April 2005, the Municipal Art Society presented a 23-page report listing 264 buildings it said were eligible for historic designation. At the top of the list were the buildings of the Greenpoint Terminal Market. Officials with the State Historic Preservation Office and the city's Landmarks Preservation Commission visited the site on Feb. 22 and noted that it had significantly deteriorated in the last five years, said Cassi Jimenez, a spokeswoman for the state office.

The preservationists approached Councilman Yassky, an unlikely ally, since he led the effort last year to revoke the landmark status of the Austin, Nichols & Company warehouse in the Williamsburg section of Brooklyn, a 1915 building designed by Cass Gilbert. He said he would help in Greenpoint, said Evan Thies, a spokesman. "David certainly thought that it was a good idea to landmark all or parts of the Greenpoint Terminal Market," he said.

However, Diane Jackier, a spokeswoman for the Landmarks Preservation Commission, said the panel never decided to go ahead with a historic-district designation for the area. Such an effort would have required a public hearing and then a vote by the commission, and neither was ever scheduled, she said.

"Our industrial waterfront is disappearing very fast in the face of development," said Mary Habstritt, president of the New York and New Jersey chapter of the Society for Industrial Archeology. "We're trying to get ahead of the development and get some of the important sites landmarked. Obviously, we didn't get far enough, fast enough with this one. Losing this one so dramatically is quite wrenching."

Reporting for this article was contributed by Sewell Chan, Nicholas Confessore, Kareem Fahim, Colin Moynihan, William Neuman and Margot Williams.

A version of this article appears in print on , on Page B7 of the New York edition with the headline: As Waterfront Smolders, Attention Turns to a Failed Deal. Order Reprints|Today's Paper|Subscribe